Iraq Closes in on Big Oil Deals but Short of Power

Awash with oil, Iraq is poised to ink several mega oil deals that will vault it into the top ranks of world oil producers, but the war-shattered country is back to grappling massive power shortages after a brief respite.

Peak winter consumption of electricity due to heaters being run has resulted in what appears to be a near collapse of the public power supply – those without generators to light their homes are only getting a few hours of electricity per day.

“Citizens have to reduce their consumption if they want more hours of power,” Aziz Sultan, a spokesman of the Electricity Ministry, said on Thursday. “Now we are experiencing the peak electricity load of the winter season. Citizens are consuming double our electricity output.”

Years of war, sanctions and underinvestment have severely degraded Iraq’s power grid and plants. Intermittent electricity, especially in the searing heat of the Iraqi summer, is a source of endless anger for Iraqis who live on top of the world’s third largest oil reserves.

The Electricity Ministry has often borne the brunt of complaints over shoddy public services for failing to fix the shortages almost seven years after the 2003 U.S.-led invasion.

For a while during the fall, it seemed as if the power problems had been cured. Public electricity had been running for what seemed like most of the day and the usual steady throb of generators faded into the background as cooling demand faded.

But in the past two weeks the situation has returned to the bad old days as demand for heating surges, meaning the generators only fall silent for a few short hours per day.

That has coincided this week with Iraq’s second auction of oilfield development contracts since the fall of Saddam Hussein.

Ten largely untapped oilfields, including some of the world’s biggest, will be offered to global oil companies on Friday and Sunday, potentially helping to catapult Iraq to third place among global oil producers from 11th now.

IRRITATING CONTRAST

For many Iraqis, the promise of so much oil wealth contrasts irritatingly with the state’s failure to give them electricity.

“The power cuts are destroying us. It’s more than six years after the war and it’s as if we are in the first year of it,” said Baghdad resident Mohammed Muhsin. “Electricity is our lifeline. Without it life becomes so difficult.”

Sultan said the public power grid’s capacity to produce 7,000 megawatts falls far short of demand of 12,000 megawatts. Multibillion-dollar deals for new electricity turbines from General Electric and Siemens AG capable of adding 9,000 megawatts of capacity are still in the pipeline.

He declined to say how many hours per day of electricity were being provided, but said supply had also been constrained by the need for routine maintenance before next summer on power plants.

“The people are not helping us. In winter, oil and gas are available (for heating) and they could use them, but they insist on using electricity,” he said.

Sultan said the ministry planned to implement a rationing system to encourage people to conserve energy.

Any household consuming more than around $45 worth of power every two months would be cut off. They would have to pay to be reconnected.

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